Remuneration guidelines

The Annual General Meeting held on 28 March 2017 resolved to adopt the below guidelines for the remuneration of senior executives for the period until the 2018 Annual General Meeting.

The group of senior executives encompassed by the guidelines comprises the CEO and other members of Group executive management, as well as members of the Board of Directors of the Company, to the extent employment or consulting agreements are entered into. The guidelines are valid for remuneration under agreements entered into after the approval of the guidelines by the AGM, and for changes made to existing agreements thereafter.

The remuneration to the management may consist of fixed salary, variable salary, long-term incentive programmes, pension and other benefits. The total remuneration package should be based on market terms, be competitive and enable the Company to recruit and retain the managers the Company needs to meet its short-term and long-term targets.

Fixed salary

The fixed salary for the CEO and the other members of the senior management shall mirror the demands and responsibility that the position entails as well as individual performance. The fixed salary for the CEO and the other members of the senior management is to be reviewed on a yearly basis.

To the extent a member of the Board of Directors carries out work for the Company or for another Group company, in addition to the board work, consulting fees and/or other remuneration for such work may be payable.

Variable salary

Variable salary in cash is conditional upon the fulfilment of defined and measurable criteria and should be maximised to 140 percent of the annual fixed salary for the CEO and 70 percent for the other members of senior management. These criteria are determined for the promotion of the Company’s and the Group’s short-term and long-term targets, long-term development, value creation and financial growth and shall be designed not to encourage excessive risk taking. Terms and conditions for variable salary should be designed so that the Board of Directors, if exceptional economic circumstances prevail, has the option of limiting or refraining from payment of variable salary if such a measure is considered reasonable. In this context, fixed annual salary means cash salary earned during the year, excluding pension, supplements, benefits and similar.

Long-term incentive programmes

The aim of having long-term incentive programmes is to create a long-term commitment to the Company, to attract and retain members of the senior management and key employees and to align the interests of the participants with the interests of the shareholders.

Long-term incentive programmes, if any, should constitute a complement to the fixed salary and the variable salary, with participants to be nominated based on, among other things, competence and performance.

Pension

Pension benefits should be defined contribution. For senior executives outside Sweden, pension benefits may vary due to legislation or practice in the local market.

Other benefits and compensation

Fixed salary during notice periods and severance payment, including payments for any non-compete restrictions, shall in aggregate not exceed an amount equivalent to the fixed salary for three years for the CEO and 18 months for the other members of senior management.

Other compensation may consist of other benefits that are customary and in line with market practice, such as healthcare insurance, which shall not constitute a material portion of the total remuneration.

Additional compensation may after decision by the Board of Directors be paid out in extraordinary circumstances, provided that such arrangement is made for management recruitment or retention purposes and is agreed only in individual cases. Such extraordinary arrangements may for example include a one-off cash payment, or a support package including relocation support or similar.

Deviation from the guidelines

The Board of Directors may resolve to deviate from the guidelines if the Board of Directors, in an individual case, is of the opinion that there are special circumstances justifying that.

Current terms of employment for the CEO and Group management

Remuneration

Remuneration to the Group management comprises base salary, variable remuneration, pension and other benefits. The table below shows the salary and other remuneration to the CEO and other members of the Group management recognised as expenses in 2016.

TSEK

Base salary

Variable remuneration

Other benefits 1)

Pension expenses 2)

Total

President and CEO

6,188

8,258

312

2,475

17,234

Other members of Group management*)

21,297

13,931

5,043

5,088

45,358

Total

27,485

22,189

5,355

7,563

62,592

*) 10 persons during 2016.1) Consists primarily of company car, subsistence allowance and housing benefits.2) The Group management’s pension plans are defined contribution plans. There are consequently no amounts set aside or accrued to provide pension, retirement or similar benefits to the current Group management. Pension expenses include costs for disability pension insurance and survivor annuity.

Notice of termination

The notice period for the CEO and other members of the Group management is six months in the event of termination by the senior executive, without entitlement to severance pay. In the event of termination by Munters, the notice period is 12 months for the CEO and six months for other members of the Group management. In such event, severance pay corresponding to 24 months’ salary is payable to the CEO, and severance pay corresponding to 12 months’ salary is payable to other members of Group management.